31 March 2010

Bank Branch Auditors List- RBI

List of Branch Statutory Auditors recommended for appointment by RBI for the year 2009-10. - (31-03-2010)
Members are hereby advised (i) not to make telephonic/e-mail enquiries at the offices of Reserve Bank of India and (ii) in case any error creeps in during data transfer or otherwise, the records available with Reserve Bank of India would be final.

Further, as informed by RBI, "during the year 2009-10, the following 15 PSBs have exercised managerial autonomy in regard to selection and appointment of SBAs, viz. State Bank of India, Allahabad Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Punjab National Bank, Syndicate Bank, UCO Bank , Union Bank of India, Punjab & Sind Bank and Andhra Bank.

The names of audit firms recommended by these 15 banks and approved by RBI and the names of auditors forwarded by RBI to the 11 PSBs which have not opted for managerial autonomy for the year 2009-10 are also displayed in the list.

The information in regard to branches allotted to these audit firms will be hosted by RBI on the web-site, after receipt of the information from the respective banks. RBI has advised Banks furnish the information regarding allocation of branches latest by April 30, 2010.

While forwarding names of audit firms, banks have been advised that not more than three branches may be allotted per audit firm and that they should allot branches, to the extent possible, to the audit firms taking into consideration their category and audit experience in such a way that bigger branches are audited by larger/experienced audit firms. It is not necessary that all the audit firms whose names are forwarded by RBI to various banks are allotted branch audit by the respective banks, as sufficiently higher number of audit firms are forwarded to banks in order to enable them to allot audit assignments as per their logistic requirements. It also often happens that some of the audit firms whose names are forwarded are either not allotted any audit assignment or are allotted assignment by some other bank, after their names are returned back to RBI due to various reasons and re-allotted/ considered for re-allotment, if any, required by some other bank. "

For the list, please click here

28 March 2010

KYC Guidelines-Proprietary Concern

Date: Mar 26, 2010
Know your Customer (KYC) guidelines - accounts of proprietary concerns

RBI/2009-10/362
DBOD.AML.BC.No.80/14.01.001/2009-10

March 26, 2010

The Chairmen and Chief Executive Officers

All Scheduled Commercial Banks excluding RRBs/
All India Financial Institutions/Local Area Banks

Dear Sir,

Know your Customer (KYC) guidelines - accounts of proprietary concerns

A reference is invited to Para 2.4(a) of the Master Circular on KYC/AML/CFT/Obligation of banks under Prevention of Money laundering Act (PMLA), 2002 issued to banks vide DBOD.AML.BC.No.2/14.01.001/2009-10 dated July 1, 2009. It has been advised to banks that internal guidelines for customer identification procedure of legal entities may be framed by them based on their experience of dealing with such entities, normal bankers' prudence and the legal requirements as per established practices. If the bank decides to accept such accounts in terms of the Customer Acceptance Policy, the bank should take reasonable measures to identify the beneficial owner(s) and verify his/her/their identity in a manner so that it is satisfied that it knows who the beneficial owner(s) is/are

2.  For sake of clarity, in case of accounts of proprietorship concerns, it has been decided to lay down criteria for the customer identification procedure for account opening by proprietary concerns. Accordingly, apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, banks / financial institutions  should  call  for and  verify  the  following documents before opening of accounts in the name of a proprietary concern:

i) Proof of the name, address and activity of the concern, like registration certificate (in the case of a registered concern), certificate/licence issued by the Municipal authorities under Shop & Establishment Act, sales and income tax returns, CST/VAT certificate, certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities, Licence issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, etc.

ii) Any two of the above documents would suffice. These documents should be in the name of the proprietary concern.

4. These guidelines will apply to all new customers, while in case of accounts of existing customers, the above formalities should be completed in a time bound manner and should be completed before December 31, 2010.

5.   Please acknowledge receipt.

Yours faithfully,

(Vinay Baijal)
Chief  General Manager



--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
          +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
          vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

25 March 2010

Bank Audit Engagement Letter- Word Format

Bank Audit Engagement Letter as suggeste by ICAI in Word Format-see attachment


The Branch Manager, Dt. /03/2010

Dear Sir,

Sub: Audit of accounts of your Branch for the year 2009-10 – Audit Engagement /Management Representations.

***

You have already been informed by your Management, that we have been appointed as the auditors to audit and report on the accounts of the Branch for the year 2009-10.

We have accepted the appointment, and we confirm that the audit shall be carried out in accordance with the applicable legal provisions and the regulatory requirements, besides the applicable authoritative pronouncements of the Institute of Chartered Accountants of India, with the objective of expressing an opinion on the Branch financial statements. For this purpose we will perform sufficient tests to obtain reasonable assurance as to whether the information contained in the accounting records and other source data is reliable and sufficient as the basis of the preparation of the financial statements; and whether the information is properly presented in the said statements.

You are aware that the responsibility for the preparation of the financial statements including adequate disclosure is that of the Management, and this includes the maintenance of adequate accounting records and internal controls, the selection and consistent application of appropriate accounting policies, including implementation of applicable accounting standards along with proper explanation relating to any material departures from those accounting standards. The management is also responsible for making judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Branch at the end of the financial year and of the profit or loss of the Branch for that period, and the safeguard of the assets of ;the Bank/branch.

We will conduct our audit in accordance with the auditing standards generally accepted in India and with the requirements of law. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the managements, as well as evaluating the overall financial statement presentation. However, having regarding to the test nature of an audit, persuasive rather than conclusive nature of audit evidence together with inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatements of financial statements, resulting from fraud, and to a lesser extent error, if either exists, may remain undetected.

In addition to our report on the financial statements, we expect to provide you with a separate letter concerning any material weaknesses in accounting and internal control systems which might come to our notice through the Long Form Audit Report (LFAR), or otherwise.

We also wish to invite your attention to the fact that our audit process is subject to 'peer review' under the Chartered Accountants Act, 1949 and the reviewer may examine our working papers during the course such review.

We wish to complete some audit procedures even prior to the year-end, depending on your readiness / response.

In view of the severe time constraints imposed, we are confident you will make available to us, within the dates stipulated, the following Branch returns / statements duly completed, pre-reviewed and duly authenticated, to enable us to furnish our reports in the form and manner desired of us by law or by the Reserve Bank of India and not necessarily in the form and manner prescribed by the Bank.

Statements / returns:

a) the Balance Sheet as at 31.03.2010

b) the Profit and Loss Account for the year 2009-10

c) the statements relating to the particulars of Advances as at 31.03.2010 and

d) other supporting returns / statements / annexures.

(including those covering also the LFAR requirements)

Information / clarification as stated in Annexure 'I' to this letter in connection with our assignment, may please also be expedited.

To enable us to monitor the progress of the audit and completion of the assignment, please indicate / mentioned, the actual dates(s) of completion as well as handing over to us of each statement / return / confirmation or other information required to be prepared by your (as per the contents of the letter of appointment sent to us), by your endorsement on each such statement / return / confirmation, before the same (duly authenticated) are handed over to us on 1st April, 2010

We await your commitment.

As part of the audit process, we will expect to receive from the Management, written confirmation of the representations made to us and a written response (para-wise), to our requirements is imperative, and such response is to be based on your verification of facts.

We shall be greatful if your could confirmed the name(s) of the Officer(s) designated by the Branch to comply with our requirements in connection with the audit, so that our reports are expedited.

We shall appreciate your co-operation in the matter.

Thanking You

Yours faithfully

For Chartered Accountants

Proprietor / Partner

Membership No.

--
CA. V.M.V.SUBBA RAO

RBI issues Revised Guidelines on Uniform Accounting for Repo/Reverse Repo Transactions

Date : 23 Mar 2010
RBI issues Revised Guidelines on Uniform Accounting for Repo/Reverse Repo Transactions

The Reserve Bank of India had today issued revised guidelines on Uniform Accounting for Repo/Reverse Repo Transactions.  The guidelines replace the guidelines issued in March 2003 which treated 'repo' as a combination of two independent sale/purchase transactions as per the legal provisions prevailing then. The accounting norms now propose to capture the economic essence of 'repo' as a collateralised lending/ borrowing transaction that is structured as a legal sale / purchase of securities as recognised by the RBI (Amendment) Act, 2006. The revision in the accounting norms would bring such transactions on to the balance sheet of the repo participants in its true economic sense, thus enhancing transparency.

The salient features of the revised guidelines are:

  • The revised accounting guidelines will apply to market repo transactions in government securities and corporate debt securities.  These accounting norms would, however, not apply to repo / reverse repo transactions conducted under the Liquidity Adjustment Facility (LAF) with the RBI.

  • The securities sold under repo would continue to be reflected in the investment account of the repo seller and would be subject to the usual mark to market valuation discipline. Accordingly, the repo buyer would not reflect the securities acquired under repo in his investment account.

  • The movement of securities should be accounted for in the books of the counterparties by showing it as contra entries for the sake of greater transparency.

  • The regulatory treatment of market repo transactions in government securities will continue as hitherto, i.e., the funds borrowed under market repo will continue to be exempt from CRR/SLR computation and the security acquired under market reverse repo shall continue to be eligible for SLR.  The applicability of the CRR/SLR norms for repo transactions in corporate bonds will, however, be as per the guidelines issued vide IDMD.DOD.05/11.08.38/2009-10 dated January 8, 2010.

The revised accounting guidelines for market repo will be effective from April 01, 2010.

G.Raghuraj
Deputy General Manager

Press Release: 2009-2010/1278



--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
          +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
          vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

Web based registration of Chartered Accountant firms for empanelment for Concurrent Audit assignment for the year 2010 - 11

Dear sir,                                                                                                   

 

 

Ref : Web based registration of Chartered Accountant firms for empanelment for Concurrent Audit assignment for the year 2010 - 11

 

We have pleasure in informing you that our Bank has invited online applications for empanelment for Concurrent Audit assignment for the year 2010 - 11. The registration for the same will be open on our website www.denabank.com from 25.03.10 to 15.04.10. The details of the same are available on our website .

 

This is for your information.

 

Dy. General Manager
Inspection and Internal Audit Department,
4th floor, 17, Horniman Circle, Fort,
Mumbai -23

22 March 2010

Reference Material on Bank Audit [1 Attachment]

[Attachment(s) from Ashwin Nagar included below]

Dear Members,

Members are requested to please see the Reference Material on Bank Branch Audit (2009 - 2010) available on the Institute Website at http://www.icai.org/resource_file/18440ebookrmba.pdf

Regards,

Committee on Capacity Building of CA Firms
The Institute of Chartered Accountants of India

Click the attachement beolw to open it

__._,_.___

Attachment(s) from Ashwin Nagar

1 of 1 File(s)

Reference Material on Bank Audit

Dear Sir,
 
Members are requested to please see the Reference Material on Bank Branch Audit (2009 - 2010) available on the Institute Website at http://www.icai.org/resource_file/18440ebookrmba.pdf
 
Regards,
 
Committee on Capacity Building of CA Firms
The Institute of Chartered Accountants of India

--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
          +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
          vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

17 March 2010

Additional Diclosures in Notes on Accounts ofBanks

To obtain an aligned printout please download the (36 kb) version to your machine and then use respective software to print the story.
Date: Mar 15, 2010
Additional Disclosures by banks in Notes to Accounts

RBI/2009-10/347
DBOD.BP.BC.No. 79 /21.04.018/2009-10

March 15, 2010

The Chairmen/Chief Executives of
All Commercial Banks
(excluding RRBs)

Dear Sir,

Additional Disclosures by banks in Notes to Accounts

The Reserve Bank has been taking several steps from time to time to enhance the transparency in the operations of banks by stipulating comprehensive disclosures in tune with the international best practices.

On a review of the existing disclosures, it has been decided to prescribe the following additional disclosures in the 'Notes to Accounts' in the banks' balance sheets, from the year ending March 2010:

  1. Concentration of Deposits, Advances, Exposures   and  NPAs
  2. Sector-wise NPAs
  3. Movement of NPAs
  4. Overseas assets, NPAs and revenue
  5. Off-balance sheet SPVs sponsored by banks
The prescribed formats are furnished in Annex.

Yours faithfully

(B.Mahapatra)
Chief General Manager


Annex

I. Concentration of Deposits, Advances,  Exposures   and  NPAs  

Concentration of Deposits

(Amount in Rupees Crores)              

Total Deposits of twenty largest depositors

 

Percentage of Deposits of twenty largest depositors to Total Deposits of the bank

 

Concentration of Advances*

(Amount in Rupees Crores)             

Total Advances to twenty largest borrowers

 

Percentage of Advances to twenty largest borrowers to Total Advances of the bank

 

*Advances should be computed as per definition of Credit Exposure including derivatives furnished in our Master Circular on Exposure Norms DBOD.No.Dir.BC.15/13.03.00/2009-10 dated July 1, 2009

Concentration of Exposures**

(Amount in Rupees Crores)             

Total Exposure to twenty largest borrowers/customers

 

Percentage of Exposures to twenty largest borrowers/customers to Total Exposure of the bank on borrowers/customers

 

**Exposures should be computed based on credit and investment exposure as prescribed in our Master Circular on Exposure Norms DBOD.No.Dir.BC.15/13.03.00/2009-10 dated July 1, 2009

Concentration of NPAs  

(Amount in Rupees Crores)                      

Total Exposure to top four NPA accounts

 

II: Sector-wise NPAs

Sl. No.

Sector

Percentage of NPAs to Total Advances in that sector

1

Agriculture & allied activities

 

2

Industry  (Micro & small, Medium and Large)

 

3

Services

 

4

Personal Loans

 

III.  Movement of NPAs

Particulars

Amount in Rs. Crores

Gross NPAs* as on 1st April of particular year (Opening Balance)

 

Additions (Fresh NPAs) during the year

 

Sub-total (A)

 

Less:-

 

(i)  Upgradations

 

(ii) Recoveries (excluding recoveries made from upgraded accounts)

 

(iii) Write-offs

 

Sub-total (B)

 

Gross NPAs as on 31st March of following year (closing balance) (A-B)

 

*Gross NPAs as per item 2 of Annex to DBOD Circular DBOD.BP.BC.No. 46/21.04.048/2009-10 dated September 24, 2009

IV. Overseas Assets, NPAs and Revenue

Particulars

Amount ( in Rupees Crores)

Total Assets

 

Total NPAs

 

Total Revenue

 

V. Off-balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

Name of the SPV sponsored

Domestic

Overseas

 

 



--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
          +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
          vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

16 March 2010

Provisioning Requirement for Standard Assets

RBI/2009-10/337
RPCD.RRB.No.BC. 61/ 03.05.34/2009-10

March 4, 2010

All Regional Rural Banks

Dear Sir,

Provisioning Requirement for Standard Assets

Please refer to paragraph 2 of our circular RPCD.RRB.No.BC.97/03.05.34/2000-01 dated June 11, 2001 regarding provisioning requirements for 'standard assets'.

2. In this connection, a reference is invited to paragraph 158 of the Second Quarter Review of Monetary Policy for the year 2009-10 announced on October 27, 2009 (copy enclosed). It was proposed to increase the provisioning requirement for advances to the Commercial Real Estate (CRE) sector classified as 'standard assets' to 1.00 per cent with a view to building cushion against likely non-performing assets (NPAs). Accordingly, it has been decided to increase the provisioning requirement for advances to the CRE Sector classified as 'standard asset' to 1%. As regards other standard assets, it has been decided that while the provisioning requirements for direct advances to agriculture and SME sectors would remain unchanged at 0.25%, the same for all other loans and advances would be 0.40%.

3. The standard asset provisioning requirements for all categories, after the above changes, are summarised below.

Sr.No.

Category of standard asset

Rate of provisioning

(a)

Direct advances to Agriculture and SME sectors

0.25 %

(b)

Commercial Real Estate (CRE) sector

1.00%

(c)

All other loans and advances not included in (a) and (b) above

0.40%

4. Please acknowledge receipt to our Regional Office concerned.


Yours faithfully

(R.C.Sarangi)
Chief General Manager

Encl: 1



Paragraph 158 of the Second Quarter Review
Of Monetary Policy for the year 2009-10

In view of large increase in credit to the commercial real sector over the last one year and the extent of restructured advances in this sector, it would be prudent to build cushion against likely non-performing assets (NPAs). Accordingly, it is proposed to increase the provisioning requirement for advances to the commercial real sector classified as 'standard assets' from the present level of 0.40 per cent to 1 per cent.


--
CA. V.M.V.SUBBA RAO

15 March 2010

IndianCAs: Some Important Laws Which Newton Forgot to State:::

 

LAW OF QUEUE: If you change queues, the one you have left will start to move faster than the one you are in now.

**********

LAW OF TELEPHONE: When you dial a wrong number, you never get an engaged one.

**********

LAW OF MECHANICAL REPAIR : After your hands become coated with grease, your nose will begin to itch.

**********

LAW OF THE WORKSHOP: Any tool, when dropped, will roll to the least accessible corner.

**********

LAW OF THE ALIBI: If you tell the boss you were late for work because you had a flat tire, the next morning you will have a flat tire.

**********

BATH THEOREM: When the body is immersed in water, the telephone rings.

**********

LAW OF ENCOUNTERS: The probability of meeting someone you know increases when you are with someone you don't want to be seen with.

**********

LAW OF THE RESULT: When you try to prove to someone that a machine won't work, it will!

**********

LAW OF BIOMECHANICS: The severity of the itch is inversely proportional to the reach.

**********

THEATRE RULE: People with the seats at the furthest from the aisle arrive last.

**********

LAW OF COFFEE: As soon as you sit down for a cup of hot coffee, your boss will ask you to do something which will last until the coffee is cold.

**********

 
| Ashwin Nagar | FCA and SAP-FICO\SEM-BCS |
Success is not permanent and failure is not final
Ph: India: +91-98330-15352  US: +1-323-325-4111
 
Twitter      : http://twitter.com/ashwinnagar

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13 March 2010

Form 68 - Rectification of Mistakes- ROC

Companies (Central Government's) General Rules and Forms (Second Amendment), 2010 - Insertion of rul...

Companies (Central Government's) General Rules and Forms (Second Amendment), 2010 - Insertion of rule 20G(1) and Form No. 68

 

Notification No. G.S.R. 177(E), dated 5-3-2010

 

In exercise of the powers conferred by sub-section (1) of Section 642 read with sub-section (1) of 61OB of the Companies Act, 1956, the Central Government hereby makes the following rules further to amend the Companies (Central Government's) General Rules and Forms, 1956, namely:—

 

1.             (1) These rules may be called the Companies (Central Government's) General Rules and Forms (Second Amendment), 2010.

 

(2)           They shall come into force with effect from the 14th day of March, 2010.

 

2.             In the Companies (Central Government's) General Rules and Forms, 1956, hereinafter referred to as the said rules,

 

                (i)            after Rule 20F, the following rule shall be inserted, namely :—

 

"20G(1) An application for rectification of mistakes made while filing Form No.1, Form No.1A and Form No.44 electronically, on the Ministry's website, shall be made to the Registrar of Companies in Form No.68 and such application shall be accompanied by fee of rupees one thousand for rectification of mistakes in Form No.1 and Form No.IA and rupees ten thousand for rectification of mistakes in Form No.44 respectively;

 

                (2)           An application in Form No.68 complete in all respects shall be made to the Registrar within a period of three sixty-five days from the date of approval of Form No.1, Form No.IA and Form No.44 respectively by the Registrar:

 

                Provided that the provision relating to the rectification of mistakes as is referred to in sub-rule (1) shall also be made applicable to the Form No.1, Form No.1A and Form No.44 filed and approved electronically on the Ministry's website, prior to the 14th day of March, 2010.

 

                (3)           After receiving the application for rectification of mistakes, the Registrar shall examine the said application based on the relevant documents filed and available on record and thereafter approve the application and intimate the mistakes rectified to the applicant within a period of sixty days from the date of filing of the said application:

 

                Provided that the rectification of mistakes shall be allowed only once in respect of one company."



--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
          +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
          vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

IndianCAs: India Budget: Sundry Debtors and share of Pakistan

India Budget: Sundry Debtors and share of Pakistan

THERE is one item consistent and uniform in all Union Budgets from 1950. If you look at the Annexure-3 to the Receipts Budget of India, 2010-11, you will find certain interesting figures.

India ' s debt by the end of March 2011 is expected to be nearly 40 Lakh Crores.

As per the Statement of the Liabilities of the central Government, the Total Liabilities are Rs. 39,44,598 Crores. From this an amount of Rs. 300 crores is deducted and the net liability is shown as Rs. 39,44,298 Crores.

What is this amount of Rs. 300 Crores?

This is supposed to be “Amount due from Pakistan on account of share of Pre-partition debt (Approx)�.

This same amount had been shown consistently in all our budgets since 1950.

In 1950-51, when our total liability was Rs. 2865 Crores, this 300 Crores was deducted to arrive at Rs. 2565 Crores. That is the dues from Pakistan constituted slightly more than 10 percent of our debts. Ten percent of the present liabilities would amount to about 4 Lakh Crores, about 40% of today's budget.

Even at 6% interest per annum, this would amount to approximately Rs. 10,000 Crores now.

The fact is that we are not able to collect this amount from Pakistan for the last 60 years. Why to keep showing it in the budget year after year. Is it to show our inability to collect from Pakistan or do we send a copy of our Budget to Pakistan to remind them gently that they owe us Rs. 300 Crores? Why can't we simply write off this 300 Crores and be done away with it instead of having this blot in all our annual budget year after year? As a goodwill gesture, can't we tell Pakistan that their dues are written off? May be there are diplomatic problems!

Why are Dues from Pakistan shown in Statement of Liabilities of Central Government?

THE position of the undivided Government as on the date of partition was that its outstanding liabilities exceeded its assets so that ultimately it was the debt that was being divided between the two Governments. On a rough estimate the outstanding debt of the Central Government as on the 14th August, 1947, included in this is not merely the outstanding public debt but all its obligations to outside parties such as deposits in Postal Savings Banks, outstanding balances of Post Office Cash and National Savings Certificates, Provident Fund Deposits of Government servants, the amount likely to be paid to the British Government for surplus stores and other property acquired by the Defence Services and the capitalised value of the liability for pensions in payment on the date of partition and pensions earned by serving officers upto that date, was likely to be of the order of Rs. 3,300 crores.

In his Budget Speech of 1948, Finance minister Shanmukham Chetty said, “On a very rough estimate this debt is likely to be of the order of Rs. 300 crores and the rate of interest may be near about 3 per cent. Pakistan's total debt is to be repaid in Indian rupees in fifty annual equated instalments for principal and interest. As a measure of assistance to the new Dominion in its earlier years it has been agreed that the first repayment should commence only in 1952. In addition to the Rs. 75 Crores given to her out of the cash balance of the undivided Government it has also been agreed that India would make available to Pakistan a further sum of Rs. 6 crores for meeting the expenditure on the setting up of Ordnance factories and similar special institutions required by her. This amount will also be added to Pakistan's debt. With this settlement, the terms of which, as the Deputy Prime Minister has already told the House, are generous and conceived in a real spirit of assistance to Pakistan, the purely financial problems arising out of the partition may be said to have been satisfactorily solved.�

That was in 1948, but when it came to payment, nothing came from Pakistan.

In the 1952-53, budget, credit had been taken for a recovery of Rs.9 crores from Pakistan as the first instalment of its debt repayment to India, but not a paisa came.

In his 1954 Budget Speech, Finance Minister Deshmukh said, “the budget for the current year placed the revenue at Rs.439.26 crores and the expenditure at Rs.438.81 crores leaving a nominal surplus of Rs.45 lakhs. In balancing this budget, I had taken credit for a recovery of Rs.18 crores from Pakistan on account of two instalments due from that country in repayment of the partition debt. I have been having discussions on this subject with the Finance Minister of Pakistan and we both hope that it will be possible to commence the repayment of the debt in the coming year. This single factor has made for a deterioration of Rs.18 crores in the revenue budget for the current year, and converted the surplus of Rs.45 lakhs into a deficit of Rs.16. 96 crores.�

In the next year's budget speech, he said, “I am not taking any credit for repayment of partition debt by Pakistan in view of what has happened in the last two years.�

So the debt continues and do we hope to collect it some day?

09 March 2010

CBEC On Appeals

Powers of Commissioner (Appeals) to remand cases

Instructions F.No. 275/34/2006-CX.8A dated 18-2-2010

Section 35A(3) of the Central Excise Act, 1944 / Section 128A(3) of the Customs Act, 1962 as it existed before 11.5.2001 provided that Commissioner (Appeals) shall, after making such further enquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling decision or order appealed against or may refer the case back to the adjudicating authority with such direction as he may think fit for a fresh adjudication or decision as the case may be, after taking additional evidence, if necessary.

2. An amendment was brought out in the aforesaid sections vide Finance Act, 2001 w.e.f. 11.5.2001 deleting the phrase as mentioned in bold above with an intention to withdraw the powers to Commissioner (Appeals) to remand the cases for fresh adjudication to the original adjudication authorities. After the amendment in 2001, the said Sections read as follows:-

"The Commissioner(Appeals) shall, after making such further enquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against."

3. The matter whether the Commissioner(Appeals) continues to have powers to remand beyond 11.5.2001 came up before the Gujarat High Court in the case of M/s. Medico Lab. The Hon'ble High Court of Gujarat, vide order dated21.9.2004 in the case of CCE, Ahmedabad-I Vs. Medico Lab, held that Commissioner(Appeals) continues to have the power to remand even after the amendment.

4. Hon'ble Punjab & Haryana High Court in the case of CC, Amritsar Vs. M/s. Enkay (India) Rubber Co. Pvt. Ltd. vide order dated 8.3.2007 and in the case of CCE, Jallandhar Vs. B.C. Kataria [2008(221) ELT.508 P&H] vide order dated 6.9.2007 had held that the Commissioner(Appeals) have been divested of the powers to remand the cases back to adjudicating authority after deletion of that power from Section 35A(3) of Central Excise Act vide amendment made in 2001. Hon'ble High Court has distinguished the judgement of the Gujarat High Court in the case of Medico Labs in this case and also stated that the reliance on the Hon'ble Supreme Court judgement in the case of Umesh Dhaimonde (1998(98) ELT 584 ) cannot be made as in that case Hon'ble Supreme Court was not dealing with the provisions where earlier power of remand was specifically conferred and subsequently taken away by amendment carried by Finance Act, 2001.

5. The Hon'ble Supreme Court in its judgement dated 1.3.2007 in Civil Appeal No. 6988/2005 in the case of MIL India Ltd. [2007(210) ELT.188(SC)] has observed that "in fact, the power of remand by the Commissioner(Appeals) has been taken away by amending Section 35A with effect from 11.5.2001 under the Finance Bill, 2001. Under the Notes to clause 122 of the said Bill it is stated that clause 122 seeks to amend Section 35A so as to withdraw the power of the Commissioner(A) to remand matters back to the adjudicating authority for fresh consideration." The said decision of the Supreme Court was brought to the notice of CESTAT in the case of CCE, Jallandhar Vs. Hawkins Cookers Ltd. reported in 2007(8)RLT.7, but the Tribunal held that the Supreme Court in the said case had only noted the provisions of amended law whereas the specific issue whether Commissioner(A) has power to remand after amendment to provisions of Section 35A has been considered by the Hon'ble Gujarat High Court in the case of Medico Lab and the High Court has held that the Commissioner (A) has power to remand under the amended provisions also. The appeal (CEA No.29/2008) filed by the Commissioner of Central Excise, Jallandhar against the said order in the Hawkins Cookers case stating that the said observations as quoted above are part of the ratio decidendi of the decision of the Hon'ble Supreme Court , has been allowed by the Punjab & Haryana High Court vide order dated 14.7.2008 relying upon its own judgement in the case of CCE, Jallandhar Vs. B.C. Kataria [2008(221)ELT.508].

6. In the light of the observations of Hon'ble Supreme Court in the case of MIL India Ltd. and the judgement of Hon'ble High Court of Punjab & Haryana in the case of M/s. Enkay (India) Rubber Co. Pvt. Ltd., M/s. B.C. Kataria and M/s. Hawkins Cookers Ltd., you are requested to issue suitable instructions to the Commissioners(A) working under your jurisdiction to follow the said judgments strictly. It may also be brought to their notice that Hon'ble Supreme Court in the case of MIL India Ltd., while noting that the powers of remand had been taken away, has also categorically stated that the Commissioner (A) continues to exercise the power of adjudicating authority in the matter of assessment and the Commissioner(A) can add or subtract certain items from the order of assessment made by the adjudicating authority and the order of Commissioner (A) could also be treated as an order of assessment. Board instructions dated 25.7.2008 (copy enclosed) may be referred in this regard.

7. The receipt of this instruction may please be acknowledged. A copy of the instruction issued to the Commissioners(Appeals) under your jurisdiction may also be endorsed to the Board. The issue may also be monitored at your level.

Procedure in Appeal under Sec. 35A of the Central Excise Act/Section 128A of Customs Act/Sec. 85 of the Finance Act, 1994 - reg.

Instruction F.No. 275/34/2006-CX.8A, dated 25-7-2008

Section 35A of the Central Excise Act, 1994 prescribes the procedure in appeal to be followed by Commissioner (Appeals) while deciding the appeals filed before him under Section 35/35E of the Central Excise Act 1944. Similar provisions exist under Section 128A of the Customs Act, 1962 and Section 85 of the Finance Act, 1994.

2. Sub-Section (3) of the Section 35A of Central Excise Act, 1994 reads as follows-

The Commissioners(Appeals) shall, after making such further enquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against;

3. The Board has noted that Commissioner (Appeals) do not resort to the mechanism of further enquiry as provided to them under the appeal procedure as above in such cases where it may be necessary before passing the order. Sub-Rule 4 of Rule 5 of Central Excise (Appeals) Rules, 2001 provides that nothing contained in said rule shall affect the power of the Commissioner (Appeals) to direct the production of any document, or the examination of any witness to enable him dispose of the appeal.

4. In the light of the provisions as contained in the statute and the rules made there under, I am directed to request you to advise Commissioners(Appeals) working in your jurisdiction to resort to enquiry in such appeals as may be necessary in the facts and circumstances of the case before passing a just and fair order in accordance with the provisions of the Act.



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CA. V.M.V.SUBBA RAO

CBDT Instructions on Processing of IT Returns

Processing of returns of A.Y. 2008-09 - Steps to clear the backlog

Instruction No. 1/2010, dated 25-2-2010

The issue of processing of I.T. returns for the A.Y. 2008-09 and giving credit for TDS has recently been considered by the Board and following decisions have been taken, in order to clear the backlog of returns pending for processing:

i) In all the returns filed in ITR-1 and ITR-2 for the A. Y. 2008-09, where the aggregate TDS claim does not exceed Rs four lakh and where the refund computed does not exceed Rs.25,000; the TDS claim of the tax payer concerned should be accepted at the time of processing of return.

ii) In all the returns filed in forms other than ITR-1 and ITR-2 for the A. Y. 2008-09, where the aggregate TDS claim does not exceed Rs four lakh and the refund computed does not exceed Rs.25,000, and there is 70% matching of TDS amount claimed, the TDS claim of the tax payer concerned should be accepted at the time of processing of return.

iii) In all remaining cases, TDS credit shall be given after due verification.



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Best Wishes

CA. V.M.V.SUBBA RAO

08 March 2010

IndianCAs: Chartered Accountant top salary zooms to Rs 70 lakh



Chartered Accountant top salary zooms to Rs 70 lakh
6 Mar 2010, 2032 hrs IST, Bhargav Trivedi, ET Bureau
http://economictimes.indiatimes.com/articleshow/5652192.cms?prtpage=1


AHMEDABAD: Creating a record in its placement history, the Institute of Chartered Accountants of India (ICAI) has placed three of its candidates at
a record salary of close to Rs 70 lakh with Singapore-based Olam International. This is the highest ever salary offered to fresh CAs recruited from the ICAI campus, the apex body that conducts the CA examination and places the successful candidates every year. Earlier, a record salary of Rs 38.25 lakh was offered in 2007.

The three candidates who have been offered the record salary, almost double the earlier high, were picked by the agriculture supply chain major from ICAI's Chennai campus. Olam plans to hire around 8 candidates from ICAI.

ICAI started its first phase of placements through five (all metros) out of 15 campuses on March 4. The first day itself saw 320 candidates being picked up. Companies which hired successful CAs on the first day include IOC, ITC, Tolaram, Vedant, S R Batliboy, Yes Bank, GE Capital, REC, L&T, Axis Bank, Morgan Stanley, HCL Technology and Delloite.

"We are very happy with the offers we have seen on very first day of our campus recruitment. It suggests that now we are out of the global recession and recruiters are ready to offer right packages to right candidates," said Subodh Agrawal, chairmen of the Committee for Members in Industry, ICAI, in a reaction to the record offer. "It is a 100% rise from our earlier best," he added. Explaining the hiring sentiment, Mr Agarwal said: "Now with the upturn, good candidates keen to work within the country. Therefore, companies need to pay a premium to hire them for global positions."

Not just global firms but domestic giants too have aggressively picked up CAs on the first day. Leading private sector bank ICICI emerged as the biggest employer by hiring 100 candidates.

"ICICI Bank has been one of the biggest recruiters. However, it did not hire with the same fervour in the last two-three years. This time, they are back," said an official in the ICAI.

While Mumbai campus saw highest placements with 148 CAs getting offers, Delhi saw 65 offers. Kolkata, Chennai and Bangalore campuses saw 42, 22, 44 offers respectively.

While the salary offers in Mumbai were in the Rs 6.25-14 lakh, Delhi saw candidates picked up in the Rs 6-11 lakh salary range. The range was higher in Kolkata where offers were made between Rs 6 lakh and Rs 22. Tolaram, a Singapore-based diversified group offered the highest package of Rs 22 lakh in Kolkata.

When contacted by ET, Olam International confirmed the Rs 70-lakh offer. " Michael Joseph who handles global recruitments at the company said: ""We are operating in a recession-free industry. So, there are really no limits now," he said. Olam which is growing at a 25% rate, is also one of the top recruiters at the IIMs. In the ongoing placement season at the IIMs, the company picked up 12 people from the IIM-A.

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